Serbia Justice Functional Review

c. Effective Enforcement

Effective enforcement underpins the entire justice system and is an important requirement of Chapter 23 of the Acquis. Serbia has traditionally relied on judicial enforcement,249 and most enforcement cases are in the Basic Courts.250 Without effective enforcement, access to justice is effectively denied and improvements in other aspects of efficiency or quality are meaningless. This section assesses performance against Indicator 1.3 of the Performance Framework.

i. Number of Pending Enforcement Cases

The lack of enforcement is one of the biggest challenges for the Serbian court system. This is evident from the great number of backlogged enforcement cases and the accompanying congestion ratios.

In 2013, there were 2,547,215 active enforcement cases (meaning those carried over from 2012 or filed in 2013) across the Basic Courts. By the end of 2013, a total of 2,019,006 enforcement cases remained unresolved and were carried over to 2014 (Table 8 highlights the enforcement caseloads from 2010 to 2013). There are also enforcement cases in the Higher and Commercial Courts. In the Higher Courts, although enforcement cases account for less than 5 percent of the new incoming cases, their congestion ratio is close to 50 percent and indicative of a slower resolution. Other courts’ congestion ratios averaged between 0.27 and 0.76, but in the Basic Courts, the overall rate averaged between 2.02 and 3.81. Therefore, it is in the Basic Courts that the absolute numbers and congestion ratios for enforcement cases are the most significant.

Despite the well-publicized efforts to tackle enforcement backlog in a few Basic Courts, statistics from 2010 to 2013 reveal insufficient system-wide progress. Instead, it appears that most courts were disposing of approximately the same number of enforcement cases as they were receiving. There are a few exceptions, most notably in the Belgrade First Basic Court in 2011 (see the discussion on Infostan), and to some extent in 2012 and 2013. Thus, while the number of incoming enforcement cases declined over the three years, they still remain at roughly the same percentage of the pending stock.

Enforcement Departments within courts have not been well-managed and have traditionally performed quite poorly. In some courts, bailiffs face massive caseloads and receive thousands of enforcement cases per month. Arguably, the approximately 800 bailiffs have been insufficient in number and poorly distributed across the country. Court bailiffs are poorly paid, routinely lack vehicles or fuel allowances, and have been reluctant to risk venturing into bad neighborhoods. Moreover, repeated visits might exceed the value of the claim. Further, AVP does not capture the court bailiffs’ performance, and any good performance goes undetected. As a result, stakeholders report that Enforcement Departments often suffer from low morale and a lack of motivation in their job performance. In some courts, transfer of personnel to the Enforcement Department has usually been considered a form of punishment or demotion.

There has been some innovation, however. Box 6
below highlights the good work done by the Vrsac Basic
Court to reduce enforcement backlogs.

Reducing the enforcement backlog will require a
joint effort led by Basic Court Presidents. Given that
enforcement cases involve little judicial work, reforms will
depend on the engagement of the Court President, with the
support from a small number of judges, and a larger
number of judicial assistants and court staff. To date,
however, joint efforts have been rare. In Belgrade, judges
refused to be transferred to the Enforcement Department,
so assistants were sent instead. While the latter can process most of the work, finalization requires judicial participation.
Support from IT experts would be useful to develop software to identify and triage cases, and track bailiffs’ actions, as the Vrsac Basic Court has done.

Better incentives are also needed to encourage judges, assistants, and staff participation in the programs. Judges who contribute to purges could receive extra credit in productivity norms and evaluations, or their time spent in the Enforcement Department could be relevant for promotion. The transfer to the Enforcement Department might then become attractive. In Belgrade, assistants have been awarded additional leave days in recognition of their work on enforcement cases. However, to be effective, leave days should only be granted upon results and not simply upon willingness to work in an unattractive department. Leave days could be considered, for example, upon proof that targets for backlog reductions have been met. Also, non-financial awards of recognition and appreciation could be organized to help boost staff morale towards the achievement of targets.

This was a second experiment involving the active monitoring of judicial bailiffs in Vrsac. The AVP system does not generate specialized reports related to bailiffs, and at the request of the Court President, the IT administrator identifies information registered in the AVP system on enforcement cases (e.g., assigned bailiffs, dates and types of enforcement activities, collected amounts) that could be used for this purpose.

Every night, every AVP system makes full backups of the entire local database. The IT administrator installed Microsoft SQL Server on one court computer and copied the AVP files from the most recent backup to see which additional reports could be produced. Eventually, he completely retro-engineered the schema of the relational database and was able to produce some highly useful reports for the Court President. These reports revealed which activities (if any) a particular bailiff performed in the reporting period, how many collection attempts s/he made, and which cases were not ‘touched.’ With the bailiffs’ work (or lack thereof) suddenly visible and actively supervised, the bailiffs were encouraged to improve their performance. As a result, the backlog decreased and good performers were promoted.

The IT administrator regards what he created as an unpolished product, but there is evidence of the effectiveness of this approach. The IT administrator would like to establish a real reporting server that would mine the AVP database to produce new structured and formatted reports for court management. This approach would allow for a greater

ii. Number of Pending Utility Bill Enforcement Cases

The enforcement of unpaid utility bills warrants specific analysis, as it represents the overwhelming majority of the enforcement backlog. The enforcement of authentic documents (IV Cases) constitutes 82 percent of all enforcement cases in work. Among these, utility bills represent the overwhelming majority. By the end of 2013, a total of 1,748,086 IV Cases remained unresolved and were carried over to 2014. Of these, the Review estimates that around 80 to 90 percent of IV Cases relate to the non-payment of utility bills, suggesting that around 1.5 million unpaid utility bill cases remain in Basic Courts.

The issue is partially procedural.Companies have 12 months to initiate an enforcement case or their claims will expire under the statute of limitation. They therefore flood the courts with thousands of enforcement cases all at once, a process automatically generated by their software systems. The nominal value of unsettled claims is often trivial (e.g., below 10 EUR), and for persistent non-payers, repeated small-value enforcement cases (with the same creditor, same type of debt, and the same debtor) will accumulate over time but are never joined. Two to three years later, companies declare a loss in their own accounting systems, but leave the actions in the courts ‘just in case’ circumstances change.

The magnitude of unpaid utility bills is partly a social problem.254 Utilities cases do allow a more expedient treatment – they can and have been resolved on a massive scale (see Box 7 for an example from Infostan). Other European countries have experienced large utility bill backlogs and have purged these in similar ways. This experience with Infostan could be modeled with other state-owned utility companies, for example through coordination between SCC, MOF and the MOE.

The huge reduction backlogs at the Belgrade First Basic Court in 2011 was due to a single court user. In 2011, Infostan, the largest utility company in Belgrade, invited their long-time debtors to reach an agreement and pay their accumulated debts in installments without interest. For those who agreed, Infostan withdrew the pending enforcement cases before the Belgrade First Basic Court, leading to a significant decrease in the pending stock.

Infostan is now replicating the exercise. In an offer ending 30 September 2014, long-time debtors who sign agreements will be allowed to pay their debts in installments. Debts of up to 100,000RSD may be paid in 24 installments, while debts of over 200,000RSD may be paid in up to 60 installments. As at 17 June 2014, 1,527 residents of Belgrade had agreed to pay off their debts in installments, with numbers rising daily.

The impact on backlogs could be significant. Although the final outcome remains to be seen, Infostan is reported to be planning to withdraw up to 300,000 enforcement (IV) cases from Belgrade’s courts. These withdrawals would likely include a combination of debt restructuring with clients, as well as debt write-offs for very small-value cases that are not worth pursuing. This would represent around 20 percent reduction in the 1.5 million pending IV enforcement cases in Belgrade.

The Serbian judiciary should explore ways to replicate this experience with other utility providers. It should analyze what worked well in the Infostan experience, why other utility companies have not followed suit, and how they could be encouraged to do so. The result could mean the end of utility bill enforcement backlogs in Serbia.

Utility cases might also benefit from joining.The number of cases could be reduced if those involving the same debtor, creditor, and subject of claim could be identified and merged into a single claim. This would make the collection of the total amount more profitable for the bailiff and easier to set up a payment plan for. It should be of interest to the creditors and bailiffs, although it may take time to develop the technological mechanism to do so. Judges may have to be encouraged to support and facilitate such an initiative.

Basic Courts could mimic the Misdemeanor Court’s registry for the non-payment of fines.255 The details of persistent non-payers could be placed in an electronic database, and these would be denied certain government services (such as license renewals) until they agree to a payment plan for their unpaid utility bill debt. This would require a legislative amendment of the kind enacted for the Misdemeanor Courts.

Reforms in 2011 sought to address the problem of ineffective enforcement in monetary claims, such as utility bill cases, by allowing these to be dealt with by private enforcement agents.In the areas of their jurisdiction,256 enforcement agents should enjoy better incentives to provide more effective enforcement.

The creation of enforcement agents will not reduce the court’s existing backlog, but will prevent it from growing further.From 2011 to 2013, the number of incoming enforcement cases dropped by 49 percent. In 2013, only 17.6 percent of incoming enforcement cases related to the enforcement of authenticated documents. It is likely that this trend will continue. However, if enforcement agents do not actually increase the rate of successful enforcement of authenticated documents, the same issue will persist – the backlog issue would merely be shifted from the courts to private entities.

Perceptions vary regarding the effectiveness of the recent reforms.In the Multi-Stakeholder Justice Survey, most respondents considered that the reforms will do little to affect efficiency, and perceptions of the effectiveness of the law have deteriorated (see Figure 38). This may be due to the range of implementation challenges, discussed below.

The numbers of enforcement agents is growing, but they are not yet uniformly available throughout the country.258 There is an insufficient number in Central/Southern Serbia and concerns about the quality and efficiency of enforcement in those locations. It is expected, however, that geographic distribution will improve over time.

The registry for private enforcement agents does not provide information necessary for parties to make an informed judgment about whom to select.The only information listed in the registry is the agent’s name and date of appointment to the territorial jurisdiction of the court. On paper, the complaint process against private enforcement agents is well regulated.259 However, registries do not indicate if disciplinary actions have been initiated or fines levied against a particular enforcement agent.

Enforcement fees are opaque, and this may act as a disincentive to effective enforcement.Fees are assessed using a complex system based largely on the value of the amount to be collected and cannot be easily determined. In addition, parties in non-utility cases who have obtained a court judgment and have already paid court fees are often reluctant to incur additional costs by hiring enforcement agents. At this juncture, many court users simply ‘give up’ on their cases.

Further, enforcement agent fees are relatively high. For example, the deposit fee alone to request the enforcement of a divorce decision would cost an average Novi Pazar resident 56 percent of their monthly net income and 14 percent for an average Belgrade resident. The deposit alone thus represents a further barrier to access to the Serbian courts, particularly given that several fees have already been incurred by this stage of the proceeding.

Limited availability of and costs for enforcement agents go against European principles that enforcement be cost effective and readily available.

‘(…) Member states should facilitate the efficient and cost-effective enforcement of judicial decisions (…) Enforcement fees should be reasonable…’

Council of Europe Recommendation 2003 (17)

‘Parties should be able to initiate enforcement proceedings easily. Any obstacle to this, for instance excessive cost, should be avoided.’

CCJE Opinion No. 13, Conclusion

Perhaps most problematic is the persistent concerns regarding collusion and kickbacks to private enforcement agents.Stakeholders report that a number of socially-owned enterprises have transferred many thousands of unmeritorious enforcement cases to a select number of enforcement agents.261 The size of the transfers alone raises some concern, as they are beyond the ability of a single enforcement agent to action within a reasonable period of time. According to stakeholders, enforcement agents thus received large amounts in enforcement deposits without acting on the cases. The public perception of enforcement agents has been harmed by these suspicions, and this is likely to further reduce trust and confidence with the judicial system as a whole.

The number of enforcement cases that remain pending with enforcement agents has grown each year, since the profession was established in 2011.However, the precise number of pending cases is not known. Each enforcement officer is obliged to file an annual report noting their total number of cases resolved, unresolved and the ratio of assets to claims. This information would be useful to monitor performance across the profession. The Chamber of Bailiffs has indicated that it intends to do so but is yet to publish its reports. Several stakeholders reported that, if the performance of private enforcement agents is not monitored carefully, the backlog problem will remain – it will simply have been displaced from courts to enforcement agents.

A range of options is available to remedy these implementation challenges.First, training would assist for private enforcement agents to improve the efficiency and quality of their work. Caps on the number of cases assigned to each enforcement agent would assist in balancing the workloads of enforcement agents. Debtors could also employ a panel of enforcement agents (e.g., three) rather than a single agent. The Chamber should set quality and efficiency standards, including standard timeframes for when an enforcement agent should either complete or abandon a case. The Chamber of Bailiffs is proposing amendments to the law requiring state-owned creditors to distribute cases more evenly among private enforcement agents and adding a complaint process to the Chamber, allowing the suspension of agents from the list until their backlog is reduced. Improvements could include requiring remedial training for bailiffs for less serious performance issues such as excessive delay.

Some stakeholders suggest that private enforcement agents should take over the utility bill backlog from the Basic Courts, but the Functional Review advises against this. First, the enforcement deposit is likely to exceed the value of most of these cases. Several more cases are also likely to be found unenforceable or unmeritorious. So it is unlikely that enforcement agents would have any more success in resolving them than the courts have. To transfer large amounts of cases of negligible worth to enforcement agents would thus massively increase the cost of their resolution without results. Further, such a decision would likely to be viewed with suspicion by many stakeholders and the public, in light of the sensitivity of utility bill enforcement and prevailing concerns regarding the integrity of enforcement agents in cases involving large numbers of unmeritorious cases. First and foremost, these cases require triage and analysis. Many are likely to require purging or would be amenable to mass resolution by installment plans in a manner similar to what Infostan has done at the Belgrade First Basic Court. Such options can be pursued at minimal cost within the existing regulatory framework.

iv. Enforcement of Court Judgments

The enforcement of court judgments performs considerably better than utility bill enforcement. Data from the Multi-Stakeholder Justice Survey provide some insight into the enforcement of court decisions in real cases (i.e., other than utility bill enforcement).262 Figure 39 below compares the evaluations by judges, prosecutors and lawyer in the two surveys. Not surprisingly, lawyers were less satisfied, although their perception is improving.

In cases where the court decision has been enforced (over 80 percent of cases involving survey participants) a majority of respondents reported that enforcement occurred within the legal deadlines (Figure 40). Recent amendments to the Law on Enforcement and Security of Court Judgments have further improved efficiency. This reinforces the finding that many cases, particularly new cases, proceed smoothly through the system, and when systems work, they work well. Meanwhile, other cases, often older cases, get ‘stuck’ and become protracted.